Sunday, January 03, 2010

ST Headlines: 10,000 get 1st CPF Life Payout

When they marketed CPF Life, they spared no effort to paint a rosy picture:Yes, sit back, relax and enjoy an endless monthly payout for life. No worries, everything taken care of by CPF Life. So that was how it was rolled out to the public - no need for rigorous analysis, statistical assurance of adequacy and detailed comparisons with current schemes - just tell them it is good and they will sign up. The fact is there is no guarantee on these payouts - they will be adjusted to ensure the solvency of the scheme and accommodate changing lifespan of Singaporeans. There is no guarantee that its is sufficient for basic living - food, electricity, transport and rental. Why does the govt insist on implementing this scheme that doesn't really ensure anything? The reason is this. Under today's minimum sum scheme, when the CPF account holder passes away, his funds go to his beneficiaries. By implementing the CPF Life, a large part of these funds can now go to a pool and can be used by the govt as payout to the elderly - this will reduce the govt expenditure on the elderly who would otherwise might need more govt subsidies and aid. Basically, the govt identified a source of funds to that previously went to beneficies and is now using it to reduce its own future expenditure through the CPF Life scheme. The govt has already ring fenced itself from expediture on the elderly with the Maintenance of Parents Act[Link], CPF Minimum Sum, Leaseback schemes and the CPF Life is there to further reduce its own expenditure. Ultimately, lower expenditure will keep corporate taxes low and will benefit the large network of GLCs and big businesses by shifting the burden to working class families and individuals. That would have been alright if we were having forbiddingly high corporate taxes and very light financial burdens on individuals & families. But Singaporeans are already shouldering the highest % of healthcare expenditure among developed countries and our income inequality is the highest among developed nations. Corporate profits as a % of GDP were at record highs in 2007 and to adopt policies to worsen the inequality does not put the interest of ordinary Singaporeans 1st.

The deceptively simplistic marketing of CPF Life also obscures the real problem with retirement. The main challenge for Singaporeans to retire comfortably is inflation. Take price of rice as an example:

...electricity tariffs, housing costs and transport cost have been rising too. Inflation can eat away whatever money you set aside for retirement. The best way to beat inflation is to get a decent return on money set aside for retirement. The CPF scheme performs very poorly in this respect - the real rate of return is 1.5% and it ranks as one of the worst performers (if not the worst) among provident funds (Malaysia had an average real return of 3.3%[Link]). The govt actually earns a higher rate of return by borrowing our CPF for it GIC investments. This is equivalent to a form of taxation that decrease the quality of life for our retirees especially those in the lower income bracket:
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"To the extent, the government earns higher rate of return on the CPF funds than what it pays to the member, there is an implicit tax on the CPF wealth. This tax is likely to be fairly large and regressive as low- income members are likely to have most of their non- housing wealth in the form of the CPF balances. This vividly illustrates how political risks and non-transparency can arise in individual account system."
- Social Security Reform Imperatives:The Southeast Asian Case, Mukul G. Asher[Link]
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The govt has to start putting Singaporeans 1st in its policy formulation especially those that affect the ordinary Singaporean retirees - the people who have spent their entire life working and contributing to the Singapore economy surely their interests have to come first.

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Home > Breaking News > Singapore > Story Jan 2, 2010
10,000 to get 1st payout
ABOUT 10,000 Central Provident Fund (CPF) members aged 62 and above this year will get the first payout from the CPF Lifelong Income Scheme For The Elderly (CPF Life) on Tuesday. Thereafter, they will get the payouts by the seventh working day of each month. This will go on for as long as they live. The CPF Board said it has sent out letters to inform eligible members of the payout date and the amount which they will get. The monthly amount depends on the Retirement Account savings they used to join the scheme. There is no minimum amount required, but members with lower balances will get lower monthly payouts. Other factors that will affect the payout include gender, age and the plan chosen. The highest payout is about $1,040 a month. As of last month, about 37,000 members have opted for the annuity scheme, committing a total of $1.5 billion to it. Of those who signed up, 72 per cent qualified for the L-Bonus and 74 per cent qualified for the V-Bonus.

33 comments:

Anonymous said...

Singapore has no oil or natural gas for export to generate $$ so must have high HDB flat prices and CPF life (delay withdrawals etc) as alternative $$ sources for the govt.

What to do and some more sure 98% seats at every election.

Anonymous said...

My grandfather's property tax has increased from $700 to $2000! And my father said, "The government is desperate to dig out money from every possible source." What does this tell you about the state of the national coffer? Shudder. Without checks and balances, we don't even know whether it is empty, or siphoned off in the guise of bank losses.

Towkay said...

Don't worry lah Singaporeans. As promised by PM Lee, PAP will take care of you first, there are still $400 a month jobs reserved for elderly Singaporeans. But you must change your attitude to be less fussy.

Anonymous said...

...yes 'take care' and 'fix you'.....

Anonymous said...

That's why I will not bear arms and risk my life for Singapore. If war comes, either run away early or learn from LKY: surrender and be translator for the occupying forces.

You get injured in war, you think Singapore govt will take care of you?

You get killed in war, you think Singapore govt will take care of your family?

Singapore govt doesn't even have a track record of taking care of you during times of peace and plenty.

You expect them to take care of you during war?

I really can't understand why you vote PAP so much. Are you that terrified of them?

Anonymous said...

I am quite sure that the government meant it when they say they will help. For example they increased the GST to help the poor, didn't they? The poor who had never paid any income tax before had since been given the opportunity to contribute just like the multi-million$$$ minister$$$ for everything they purchase. I am sure they had made the poor feel proud of themselves by doing so. They also helped the motorists by increasing the ERP rates and extended the timing to help improve the traffic. If you are not satisfied with the condition, I'm sure they would be very willing to help you even more with more ERP's gates and higher rates.

I feel bad for getting so much help!

Anonymous said...

PAP leaders only good for passing laws to legally help themselves to taxpayers monies.

Think about it:

Thousands of Singaporeans lost their savings in the minibond fiasco. What did our highly paid PAP ministers do to help us?

They told us that we went in with our eyes opened.

The PAP ministers insist on million dollar salaries, pensions while collecting their salaries, but for us, we get depressed salaries

Anonymous said...

Just read history - this has never been proven astray that absolute power corrupts absolutely.

Vote out pap. This is your last chance.

Anonymous said...

The scheme should be more accurately called CPF LIES.

CPF investment scheme was started when the govt was listing its assets on the market to fetch better price they unleash the CPF for purchasing SingTel shares.

CPF was liberalised for housing so that HDB can fetch higher prices for its public housing.

CPF was cut to reduce employers cost in past recession but never restored.

Is it any surprise CPF is not enough for retirement? It was used for everything else under the sun by this govt.

Anonymous said...

"The highest payout is about $1,040 a month." This is a marketing gimmick, like in great singapore sales, telling you discunt "as high as 90%". Which also means the payout could be as low as $100 a month! Lower than the army recruits, lower than the filipino maids!

Anonymous said...

GST is an excuse to tax every single poor citizens, including old folks, students, children, retirees, retrenched. Dear citizens, use your sacred vote wisely for the sake of your next generations, do not let them become slaves to one dominating party.

wl said...

The way for Government to help retirees is to see that the returns on savings are not kept ridiculously low. If there is a fair return than everyone, other than the banks, will be better off.

Anonymous said...

Election is definitely near...heard ballot boxes (?)seen at Elections Dept @ Prinsep Link

Anonymous said...

I am sick of being helpless seeing all things prices going up.

Have they raised enough money now to fill up that HOLE already? (Investment lossess)

Anonymous said...

This system is fair.

JUST MAKE SURE YOU LIVE THROUGH a 100 years old.

contrarian said...

An excellent analysis. Congratulations.

Anonymous said...

I really appreciate the article and posting of comments. All very well written.

I will vote for the opposition and call up all friends and relatives to do likewise.

Anonymous said...

This is a good blog entry. I, especially, like the Youtube clip you added to make it clear on how those statisticss are to be read. That guy in the clip are the sort of Singaporeans I love to talk to. They can be a little brash but they offer a breathtakingly honest perspective.

Anonymous said...

I have a strange feeling that various increases will be rolled out after the election unless they have recouped their investment losses.

rookielim said...

There are only 2 ways to get around this to safeguard our money in CPF 1) vote PAP out of parliament so that the new government will make some serious real changes for the benefit of Singaporeans. 2) renounce our citizenship and take out our CPF.

I will try the first and if it does not work... bye bye Singapore.

Anonymous said...

it is not smart to oppose the papaya unless one is very loaded and have powerful backing.

Anonymous said...

I wonder if Ho Ching will go down in history as the next Empress Dowager Cixi who plundered the national coffers for her (gambling) whims.

Anonymous said...

do you know how we can make use of the money in CPF Special Account? Or what is the purpose of the SA?

Anonymous said...

http://www.adam-khoo.com/304/the-expats-will-rule-singapore/

I hate to say this but in a way, I prefer to hire expats for my own business than locals. Expats are willing to work long hours, go the extra mile, are fiercely loyal to you and don’t complain so much. They also come alot more qualified and do not ask the moon for the remuneration. Recently, I placed an ad for a marketing executive. Out of 100+ resumes, more than 60% came from expats. While locals fresh grads are asking for $2,500+ per month, I have expats with masters degrees from good universities willing to get less than $2,000! They know that if they can come in and learn and work hard, they will eventually climb up and earn alot more. They are willing to invest in themselves, pay the price for future rewards. Sometimes I wonder how some of the locals are going to compete with this

Anonymous said...

Adam Khoo is a quake and I suggest we do not take his words too seriously. My principal sent the whole of sec 4 for his mindwashing in order to motivate them for the O levels and the effect lasted only 2 or 3 days.

Anonymous said...

Adam Khoo is a quake and I suggest we do not take his words too seriously. My principal sent the whole of sec 4 for his mindwashing in order to motivate them for the O levels and the effect lasted only 2 or 3 days.

Anonymous said...

Dear expat lover,

A lot of expats love singapore because they dun have to pay tax (eventually, they can take out their cpf). When they go home, they can enjoy the welfare of their home country which they did not pay for.

Anonymous said...

I wonder if Adam Khoo is willing to accept $50 as a fee for his seminar, instead of always demanding to be paid thousands of $$.

No? What happened to "willing to go the extra mile" and "will not ask for the moon"?

Adam Khoo looks like a fatso in his recent photos. That, I suppose, has to do with his "drive" and "determination" to succeed?

Anonymous said...

I feel so great to have such a caring Gov! I believe that they will keep the payout so low that it will barely sustain us, so we can feel the spurs in our hide when we are old and still make contribution to our nation!
We can only rely on the foreign talents to keep our streets clean and recycling business humming for so long right? What foresight our gov have! I feel I got a long life to live already! YAY!

xl said...

Cpf becoming a tool for govt to suck $ from population especially through hdb.

After sucking out huge amounts through housing, not much left for retirement for masses.

Chart 2:
http://mycpf.cpf.gov.sg/NR/rdonlyres/1CD89DEC-1CD2-4772-83CE-F6D2B65F3467/0/CPFTrendsMinimumSum_2008.pdf


I suspect is now less than 30% meeting minimum sum at age 55. It will continue % downward due to continued artificial bubble sucking even more $ out of populace.

Highest form of taxation & hidden.

Anonymous said...

prices and some taxes(if not most) sure to increase...

this is how it is....

and regarding voting?

sorry lor....walk-over....no need to hassle, no need to vote..

snap election, opposition no need to prepare liao....the end...

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